Expanding the Entrepreneur Class

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The world needs more entrepreneurs: They make innovation real and advance what Brink Lindsey, of the Kauffman Foundation, has called the “frontier economy.” If their ranks are too thin, it is a failure of society—particularly because the knowledge and skills of a successful entrepreneur can be taught.

Indeed, in the recent rise of formal education in entrepreneurship we see these superheroes of creative destruction finally being given their due. The number of U.S. schoolchildren exposed to entrepreneurship as a career choice has grown rapidly. At least 600,000 college students take a class in entrepreneurship every year. Ten years ago their number was negligible.

The problem is that we have nothing to show for it. If the resources devoted to teaching entrepreneurship have increased, but business start-ups have fallen by a third (from a longtime average of 600,000), one might even think that formal education in entrepreneurship is working against us. Perhaps it’s no surprise that some of our most famous business geniuses haven’t had the patience to collect diplomas. Could it be that we lack imagination about how to teach them?

My theory is that a system that leaves the education of entrepreneurs to schoolteachers (whose choice of profession displays little appetite for economic risk-taking, and who thus may be ill equipped to convey what entrepreneurs actually do) is inherently weak. A more obvious weakness is the material typically taught under the rubric of entrepreneurship. Most college-level courses are akin to anthropology, subjecting the tribe of entrepreneurs to curious scrutiny. The ones that aim to provide practical help tend to focus on business-plan writing skills. Few impart what it really takes to get a business up and running.

If the ranks of entrepreneurs are too thin, it is a failure of society.

That is why I’m excited by two programs that show what does work. One is Startup Weekend, which was developed by a Seattle nonprofit and is quickly spreading. In just 54 hours, trained facilitators and rapid prototyping help aspiring entrepreneurs go through many iterations to arrive at viable business models. Startup Weekend has birthed hundreds of new companies.

The other is The Launch Pad, founded at the University of Miami four years ago, as the recession was making a new reality painfully clear: Even college graduates couldn’t find jobs. Rather than pressuring its placement office, the university reconsidered its product. It developed an intensive program for undergraduates whose best shot at meaningful work was to start their own businesses. A glass office block in the middle of the campus was configured to support work on start-ups by juniors and seniors, who receive advice from successful businesspeople (many of them alumni). To date, The Launch Pad is responsible for 65 new companies and 200 new jobs in Miami.

Any region or country could learn from these programs and their “just in time” model of skill transmission. The need is particularly acute in the United States. Back to Lindsey’s analysis: The U.S. has principally served as a frontier economy, propelling the innovation that yields progress and prosperity. Much economic success in the rest of the world has occurred through “catch-up growth” that leverages innovations hatched by U.S. entrepreneurs. If America falters in this, its economic advantage withers—and the rest of the world suffers, too.

But look at how few entrepreneurs we hang those hopes on: Only about 400,000 people started businesses in America last year. This is the less than 1% we should be agitating about. (In fact, it is 1% of 1% of 1%.) As we work to expand our base of entrepreneurs, education can make a difference. But we need to think differently about education.

Carl Schramm was president of the Kauffman Foundation for 10 years. He is a fellow at the Bush Institute and the author, with Robert E. Litan, of Better Capitalism (Yale, forthcoming in 2012).

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